One current area of concern for the House Ways and Means Oversight Subcommittee is the “Supercharged IRS,” the 87,000 new IRS agents funded by the Inflation Reduction Act. The Republican-led Committee’s plans include monitoring increased IRS enforcement efforts and providing tax relief on things like 1099-K information returns.
In a letter to House leadership, the House Ways and Means Committee Chairman Jason Smith (R-Mo.) sent a list of oversight hearings and related activities that the Committee and its Subcommittees are planning during the 118th Congress. Below is a summary of the tax-related items on that list.
- IRS Audit Selection Procedures. Review of the processes the IRS uses to select individuals, businesses and other organizations for audit. The Committee plans to evaluate the impact of IRS audit selection procedures on taxpayers making $400,000 or less, particularly in connection with the recent infusion of $80 billion in
- Tax Relief. Hearings and other activities related to considering tax relief for families, individuals, farmers and small businesses along with discussion of restricting the IRS to a “service-first focus.”
- IRS Administration of Tax Laws. Oversight of major IRS programs, including enforcement, collection, taxpayer services, returns processing and information systems. Oversight of IRS funding and staffing levels needed to provide taxpayer assistance and enforce the tax law effectively and efficiently and modernize IRS information technology systems.
- IRS Operations. Evaluate tax return filing seasons, including electronic filing, improper payments levels and fraud prevention efforts. Examine proposed funding and staffing levels for the IRS, and legislative proposals and administrative proposals contained in the President’s fiscal year 2024 and 2025 budgets.
- IRS Administered Free File System. Examine the IRS plan to develop a new IRS-run free tax return e-filing system, including their selection of a third party to prepare a report on a possible plan.
- Treasury Priorities. Hearings to discuss and consider legislative and administrative proposals contained in the President’s fiscal year 2024 and 2025 budgets to ensure the Department is “prioritizing taxpayers over politics.”
- Tax Provisions in Public Laws Enacted During the 116th and 117th Congresses. A review of implementation of tax provisions in the COVID legislation passed in the last few years, the American Rescue Plan and the Inflation Reduction Act.
- Tax-Exempt Organizations. Oversight of federal tax laws, regulations and filing requirements that affect tax-exempt organizations, particularly charities, foundations and political groups operating as social welfare organizations.
- Tax Code and Tax Form Simplification. Oversight of tax code and tax form complexity with the goal of simplification. Review areas where taxpayers and preparers have difficulty, including information returns like the $600 threshold for 1099-K reporting.
- Tax Scams and Improper Payments. Oversight of the latest tax scams, tax shelters and tax fraud activities with a goal of protecting taxpayers and preventing identity theft.
- International Tax Negotiations. Oversight of the Administration’s multilateral tax negotiations, including the Organization for Economic Cooperation and Development (OECD)/ G20 Inclusive Framework on Base Erosion and Profit Shifting. That plan calls for a global corporate minimum tax.
- Security of Taxpayer Information. Oversight of the IRS and other federal agencies and their contractors that have access to confidential taxpayer information. Examine leaks of confidential taxpayer information in recent years to determine how leaks occurred.
- Federal Excise Taxes and Related Trust Funds. Oversight review of federal excise taxes, credits, and refunds, including the trust funds financed by these taxes. Federal excise tax revenues are collected mostly from sales of motor fuel, airline tickets, tobacco, alcohol and health-related goods and services.
Observations
It is clear from the list of focus areas that the House Ways and Means Committee intends to put IRS activities under a microscope with the goal of restricting enforcement efforts. While the added scrutiny could cause the IRS to limit some of its plans, the Committee alone cannot make legislative changes such as cutting IRS funding or enacting further tax cuts without approval by the Democratic-controlled Senate. The Committee’s agenda gives important insight into the Republicans’ negotiating position in the new Congress, particularly in legislation that typically includes tax-related provisions, like funding bills and debt ceiling increases. Ultimately, some new IRS taxpayer compliance initiatives funded by Inflation Reduction Act will likely be slowed or diminished, at least in the short term.